THE RELATIONSHIP BETWEEN DIVERSIFICATION STRATEGY AND PERFORMANCE OF FIRMS WITHIN THE INSURANCE INDUSTRY IN KENYA.

Philip Musembi Mwau

PhD Student

Jomo Kenyatta University of Agriculture and Technology

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Kenya

Dr. Margaret Oloko

Lecturer

Jomo Kenyatta University of Agriculture and Technology

Kenya

Dr. Willy Muturi

Lecturer

Jomo Kenyatta University of Agriculture and Technology

Kenya

CITATION: Mwau, M., P., Oloko, M., Muturi, W., (2016). The Relationship between Diversification Strategy and Performance of Firms within the Insurance Industry in Kenya. International Journal of Strategic Management. Vol. 5 (4). Pp 1 – 55.

ABSTRACT

Extensive research exists on the strategies applied by insurance firms to improve their performances. Very few of these studies focus on the growth strategies and more so the Diversification strategy as applied by these firms within the insurance industry. The General objective of this study was to investigate the Relationship between the Diversification strategy and the performance of firms in insurance industry in Kenya. The study investigated how the Diversification strategy has contributed to the performance of firms within the insurance industry. The target population of the study were all the 5,188 insurance players in Kenya as at 2013. The study adopted a descriptive research design and used random stratified sampling frame with a sample size of 125 respondents. Data was collected using self-administered structured questionnaire as well as from the secondary sources. The response rate was 83% meaning 102 respondents returned the questionnaire. Data was analysed using both descriptive and inferential statistics on both the independent (Diversification Strategy) and dependent (performance of firms) variables. The findings of the study were that the diversification strategy has a positive influence on the performance of the insurance firms within the insurance industry in Kenya.The study recommends that as number of firms in the insurance industry increases, it is only those who choose to pursue the Diversification Strategy will have better performances.

Key words: Insurance, Performance, Diversification strategy.

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